When it comes to technology, apparently my generation are an auspicious lot.
We don't need anyone's permission to start a free blog of our choosing, Twitter keeps us both informed and engrossed in current affairs, Facebook enables us to connect and conspire with old friends and fresh acquaintances, and LinkedIn allows us search for new jobs and associates -- all from the comfort of our smartphones.
With this in mind, many critics argue that us Gen Y'ers should be more grateful for these technological liberties we've grown into -- after all, thanks to the unprecedented informational access afforded by the Internet, we've become the most culturally conscious, socially boisterous, and politically self-aware generation in history.
Yet the way I see it, this heightened sense of self-awareness vis-à-vis the workings of the world and our precarious place within it is as much a burden as it is a blessing. For we've grown up with the world at our fingertips, raised on the assumption that our financial prospects would be the same, if not greater, than those of our parents.
In short, we were told we could have the world, and unsurprisingly, we're getting more than a little anxious out about the idea that we won't be so fortunate.
What I mean by this is that I think it's a myth that the majority of Millennials have some sort of burning desire to rage against the machine by retreating into some sort of minimalistic bohemian lifestyle. I've got a sinking suspicion it's quite the contrary.
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10 Money Mistakes Young People Make
Generation Y gets a bit of a bad reputation for not being able to handle their finances, but it may be a reputation that is deserved. Here are 10 things that millennials are doing wrong with their money and how they could do better.
1: Overconfidence
A <a href="http://www.cica.ca/about-cica/media-centre/item52894.pdf">survey</a> from the Canadian Institute of Chartered Accountants (CICA) shows that many young people think they are super savvy when it comes to their money. CICA spokesperson Nicholas Cheung says that view may not be justified. “A lot of them say that they’re confident in their abilities to budget or manage their spending, but many of them don’t even have a budget or don’t keep track of their spending,” he said.
Instead, realize your limits and recognize that there are many things that you don’t know, and that’ll send you on the path of learning. So the next time someone comes up to you and asks, “What’s a dividend payment?” or “How do banks calculate interest rates?” you’ll have an answer to give them.
2: Saving short-term but not long-term
Millennials are bad at the latter. Don’t worry, you’re not alone. A study by Visa Business Insights in August showed millennials becoming the fastest growing demographic in luxury spending. We’re snatching up those high-fashion products, travelling to far flung places and eating out on the regular, but what we’re not doing is saving our money, and that, says Tom Hamza, president of the Investor Education Fund, is a mistake.
“Managing your financial situation is a lot like losing weight,” Hamza said. “It’s really easy to eat more and indulge yourself, just as it’s easy to put on more debt. But the thing is, trying to take control of the situation takes a lot of discipline.”
3: Being clueless about your family
Do you have any idea about the state of your parents’ finances? Apparently, neither do a lot of other people. The first step to knowing how to manage your money is to know about the money models around you, and who is closer than your parents? Talk to your family and learn their mistakes and their successes – they do have useful things to teach you, really! Unfortunately, they are just not very good at getting all that knowledge they have to you. CICA’s survey found that two-thirds of parents felt they were teaching badly and wanted to be able to teach better.
CICA’s Nicholas Cheung says that “[t]hose parents who are most successful at teaching their kids about financial management skills are the ones who talk to their teenagers about the family’s financial situation and how they manage their own money.” So it may be up to Generation Y to do a little bit of the legwork and actively try to understand the family’s finances.
4: Too much plastic, not enough paper
Credit and debit cards are so ingrained in our financial interactions that sometimes we forget about ever carrying cash at all. Well, don’t, says Teacher Man, the pseudonym of a Manitoba high school teacher who writes on the popular finance blog, <a href="http://youngandthrifty.ca/">youngandthrifty.ca</a>. Using cards to pay for all your purchases makes it that much easier to spend, and much easier for you to lose track of exactly how much money is coming out of your account. Cash, on the other hand, will always give you a bad wakeup call when you open up your wallet to find it empty. So if you realize that you really need to get serious, hide those cards somewhere you can’t reach them.
5: Not paying down debt when we can
It can sometimes be easier to reward ourselves with a venti Starbucks drink after a long day’s work or to splurge on that new must-have item. But paying down your debt with whatever money you have is one of the only ways you can ensure a solid financial future.
“We’re a generation that continues to accumulate debt without paying it down,” said Lesley Scorgie, millennial author of <em>Rich by Thirty</em>. “I think this generation has become a little too comfortable with carrying debt, whereas the previous generation, people were very interested in paying it down as soon as possible.” Go without the drink and choose to be debt-free instead – you’ll thank yourself in the future.
6: Not looking at the cost-benefit of degrees
Many would-be students, says finance blogger Teacher Man, aren’t looking at what the job market is like and how high the post-graduation salaries are before choosing a program. Although it’s good to follow your dreams, he says, it is also good to inject some practicality into it. Don’t take out $100,000 in student loans when you know that the demand for jobs in your field isn’t very high, Teacher Man recommends.
7: Not moving to where the money is
Students are flocking to find work in large urban centres, but cities are having trouble finding work for all of them. “They have to be willing to move to where the jobs are,” said Teacher Man. If you hear of a job opening, even if it’s in a not so attractive area far from the conveniences of urban life, that has to be the choice you’re willing to make, he continues. Jobs won’t come running to you – but at least you can run to them.
Pictured: The boom town of Fort McMurray, Alberta, where oil industry jobs are plentiful.
8: Getting discouraged by debt
You’re out of school and unemployed or stuck in a job you’re overqualified for – but you still have all that money you have to pay back. Now what? One piece of advice is to not get discouraged.
Says Lesley Scorgie: “People are very demotivated by debt, and understandably so. It’s that sphere of the unknown, that they won’t be able to achieve anything because they’re so buried in debt. And that’s just a myth. You can achieve success.” When you get discouraged, it is all too easy to stop doing anything towards your financial future because you feel as though mortgages, cars and being financially independent are all non-options for you. Recognize that those goals are still in your grasp and don’t get stuck in that rut.
9: Thinking the financial world is beyond you
Too many people think that saving and investing is about having a mathematical brain, or that to actively save means dedicating most of your money to your bank account. Many millennials, says John Tracy, vice-president of retail savings and investing at TD Bank, think saving will cut into the life they want to lead, and that being financially savvy means putting away hundreds of dollars a month. Not so!. A dollar a day is all it takes. These small acts, Tracy says, build up a good habit of saving, so that in you’re better prepared to handle the larger amounts of money when it eventually comes your way.
10: Forgetting about interest rates
We’ve had some of the lowest interest rates in the country for a long time, points out John Tracy. High interest rates discourage consumption, while low interest rates encourage it, and we’re in an economy of such low interest rates, he says, that “the opportunity cost to consume today, in terms of paying interest, is much less.” This, however, lulls you into a false sense of security: What’ll happen when interest rates suddenly go up? They always inevitably do. Prepare for that future and pay down the money.
5 things millennials are doing right with their money
At the same time, all hope is not lost. Surprise! There are things that Generation Y is doing that do make them further ahead than other generations. Check out the five things that members of Gen Y are doing right with their money.
1: Being interested
Generation Y is definitely looking to know more, says John Tracy, vice-president of retail savings and investing at TD Bank. What he has noticed is that there is a very strong interest among millennials in doing their research online before heading into the banks, and they’ll often do it all ahead of time so they know exactly what they want. Finance blogger “Teacher Man” says that he has noticed an upwards trend in traffic to his website as his content is searched for more and more often on the web. Google Trends shows that there has been a gradual increase in searches for “pay off debt” and “save for retirement” since 2005.
2: Being frugal
Millennials are, in fact, among the most conscientious shoppers out there today, said Lesley Scorgie, a millennial who is the best-selling author of Rich By Thirty. “It’s in fashion to be frugal now,” she said. Millennials, more than any other generation, say they have or would use <a href="http://www.groupon.com/">a groupon deal</a> in order to go on their first dates. In a U.S. survey conducted by Coupon Cabin, more than 40 per cent of adults had already used groupons on their first date. “That’s a hilarious stat. It’s now become socially acceptable for this generation to be frugal.” It’s no longer a taboo thing,” Scorgie said.
3: Having a good work-life balance
Millennials, says Teacher Man, out of all other generations, value a good work/life balance, which means that they are not too obsessed about money to forget that there is a plant that needs watering. At the same time, they aren’t shirkers. Millennials understand that they need a strong financial future. If they could just get the ball rolling, they’d go far.
4: Using the Internet
Generation Y is the Internet generation, and that means that more millennials are using online banking and online money management tools than ever before. “I’m a big fan of online banking, because it saves me time, which in my mind makes me more efficient,” said Teacher Man, who is at the older end of Gen Y. “I can check my balance whenever I want, and for me that makes me more effective at managing my money.”
But, he said, there is definitely a worry, as automatic payments make it easy to lose track of where your money is going. In general, however, online tools mean that it is easier than ever to keep on top of your finances and make sure you never forget to pay a bill.
5: Thinking outside the box
Being an entrepreneur is the new best thing for millennials, says Rich by Thirty author Lesley Scorgie, especially in times when earning money the traditional way is so hard. Working your way up isn’t so easy anymore, but students who are just starting out do not have experience or opportunities coming out their back pocket.
“This generation is willing to try non-traditional things. One of the gals that worked for me at one point, now she’s starting a headband company after graduating and finding it very difficult to find a job,” Scorgie said. Go out on a limb, and you might be rewarded.
Most of Generation Y simply wants what our parents had. A graduation met with impending job prospects, a steady source of engaging employment, health benefits and a retirement plan, a partner, homeownership, a family, and a two-car garage.
To be frank, all we really want is for that ugly lie our high school guidance councillors told us in senior year "if you go to a good university and work hard, doors will open for you," to be true.
But it's not.
Instead, thanks to a particularly nasty and seemingly irreversible combination of inflation and recession, the North American dream that was enjoyed by the Baby Boomers seems to be becoming more and more unattainable with each passing year.
I'm sure many will brush these frustrations off as nothing more than the ramblings of an overly entitled generation of suburbans unwilling to pull themselves up by those same bootstraps that they did, but let's take a quick look at the numbers.
In 1979 it took roughly 800 hours of minimum wage work to earn the cost of bachelors' degree ($2,568), by 2012 the cost had risen to 2,200 hours ($22,324). As a consequence, most current post-secondary students are forced to take on lofty loans to cover the spread, leaving Millennials in a situation where over half of us will owe upwards of $20,000 when we finally enter that increasingly barren job market.
As for housing costs, the average Canadian home in 1984 cost $76,214, adjusted for inflation that's $154,587. Yet in 2012, the actual average was more like $369,677 -- an annualised gain of 5.8 per cent. So while in the mid-80s a home may have cost a family around 1.6 times its annual income, the multiple today is somewhere closer to 6.
Thus when it comes time to approach an insolvent and saturated job market ripe with 14.1 per cent youth unemployment in our misguided attempt to make enough to pay off those loans, save for that house down payment, and eat regularly, we're increasingly met with hiring freezes, short-term contracts, unpaid internships, underemployment, and unemployment altogether.
In my opinion, this unapologetic letter by an anonymous Millennial on the difficulties of landing that first job serves as the perfect snapshot for the perpetually frustrating and utterly distressing process of entering adulthood for our generation.
Yet we march onward, labelled as lazy and spoiled by an older generation who could pay tuition in a few summers, afford a house by 30, and enjoy full benefits coupled with a fully functional and institutionally preserved social safety net. No matter how hard we work, these goals are unrealistic for most of us -- this is not some apathetic plea for pity, it's a reflection of our current socio-economic reality.
And with this reality showing no real signs of the drastic reversion necessary for us Millennials to build more financially stable foundations anytime soon, perhaps it's time for us to stop clinging to that unsustainable and excessive status quo set by the Baby Boomers in the feeble hope that we'll someday be invited to re-perpetuate it.
Perhaps it's time to stop squirming and come to terms with the realization that the excessive consumption and political anachronism that has come to embody our parents' generation is nothing to aspire to, and in fact cannot -- nor should not, be repeated.
Instead, we've got a golden opportunity to re-define how we conceptualise key pillars of society such as wealth, environmental mindfulness, and political engagement.
Let me be clear -- I'm not advocating the manifestation of some instantaneous socialist utopia where the grass is green, the birds are chirping, and the workers have broken their chains. What I am saying is much more attainable than that.
Wealth shouldn't be a 5,000 square ft. home with three SUVs, when a modest bungalow and a smart car will do just fine, environmental mindfulness shouldn't be "greener" oil when plausible renewable solutions exist, and political engagement shouldn't be sheepishly voting for whatever candidate we're presented with when a democratic government is supposed to serve citizens with its policies, not the other way around.
We're equipped like no other generation to do this. All these technologies we're supposed to be thankful for -- the ones which we've unknowingly traded in our right to a real job or home in order to enjoy, serve as tools that can allow us Millennials to connect our minds and our movements around the world in order to take back our indefinitely postponed futures.
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Until people wake up, things are going to continue as they are and our grandkids are going to be even worse off than millenials because we keep using their futures to subsidize corporate profits. That is basically what this all comes down too...taxation without representation. ANd while people often refer this to government, the reality is that corporations are too blame. Their insanely high record profits today are possible only becuase we've morgaged our grankids futures. ANd then the saddest part is so many will spit in those kids faces and blame THEM for problems we've been causing for the last 30+ years.
Keep in mind that not all boomers had it easy either.
Granted, I'm over simplifying things. But I am sort of in between the Gen X and Gen Y as I was born in 76. But I was in high schoool in the early 90s and remember the big Gen X uprising quite well. Just as I remember all the older people calling them dirty, lazy do-nothings as well. There was no shortage of anger and feeling of being screwed there. And the reality is that on average, things have actually gotten worse since then, not better. So yes, younger generations are going to have it harder.
Instead, politicians go out of their way to deregulate, which encourages corporations to kill jobs, outsource, exploit modern slave labour, pollute, NOT innovate, and to dump as much of their costs on the public (externalities) as possible so WE have to clean up their messes...typically with taxpayer dollars. Meanwhile, these multibillion dollar companies make huge fortunes, get tax breaks and tax loopholes and often get tax rebates as well...which is really just another way of taking OUR money for doing absolutely nothing.
Corporate rights need to be extremely reigned in. too much movement to monopolization these days, too much corporate control from too few meaning no "real" competition, too much cost and harm to society, etc. I would also jack their taxes up substantially - corporate and on the wealthiest minority. If you are a billionaire, there is no reason you should only have to pay %30...if you even pay that much. You should be paying 90%.
Today its 7%.
Back in 1979 I had a job that paid 20 dollars a day for a 12 hour day.
Todays minimum wage is 10-11 bucks an hour.
You would get arrested today if you tried to make a student do the work we did.
Kids today don't want to get their hands dirty and figure playing with their smart phones at work is an acceptable practice.
Need I continue?
All data points to one simple, undeniable fat... younger generations are going to be paid less (relatively speaking) and yet their cost of living is going to be way higher. Which means they need to accumulate more and more debt just to keep up with expectations, but because wages are falling behind as well, they are going to have a harder time paying off those debts and having a reasonable standard of living.
Yes you ARE whiners and not very original. Students in the seventies were singing about how every generation blames the one before.
Everyone works as much during summers as they possibly can right now. In fact, a majority of students even work during the school year as well, often over 20 hours a week. It's still not enough to graduate with manageable levels of debt.
Saying that you were able to do that right out of school already proves that you were incredibly privileged. You weren't competing against nearly as many other graduates. Your credentials were worth way, way more compared to the rest of the labour force. And free trade meant you weren't competing against nearly as many other foreign countries either.
By nearly every metric possible, this is the worst time in history for anyone under 30 who's trying to start a life for themselves since the second world war. That isn't "whining", it's a fact.
I may not have been competeing against as many other graduates, but there were enough and getting a job in chosen industry meant starting at the bottom, degree or not. I work with recent University graduates now and they expect to be hired at top dollar into the best positions just because they have a degree.
Kids should be considering whether there are any jobs in thier chosen fields when they are picking thier major. If there are no jobs, take something else.
I think some responsibility has to rest with the student to research the real job opportunities of their chosen feilds before they go into debt to pay for tuition. If art history is your passion, by all means follow it. Just be realistic about your earning potential.
Your definition of wealth and the idea that you don't need a huge house, SUV's etc. to be happy are bang on.
Many of my contemporaries are quick to dismiss your group and the challenges they face, with name-calling and generalizations. We're not all like that any more than all of your generation falls into that stereotype.
We need you to succeed. I think you just need to adjust your perception of success.
1) VOTE!!! This is the single most important action that young people can take at any level. Vocalize your generation's concerns, as you're doing, but for goodness sake TAKE ACTION at the polls! Start tying your democratic power - and it is substantial! - to the political future of Canada by voting for people who want change - every single of you. No more excuses about how 'nothing will change'. Who do you think can change it?
2) Look for work in less affluent areas of Canada. You'll get something you won't get working as a barista in Vancouver or Toronto when you're 35 - a chance to be something more than a barista when you're 35. But you might have to look for it; it's the rare opportunity that walks right up to your door.
3) Take a good hard look at a trade. You can always consider university education when you have saved the money for it - or you could be running your own company by then - with the corner office, or when you've decided at 35 that you really do want that degree in Canadian history or pre-Colombian art or whatever. You're still young at 35! Believe me.
Good luck - and by the way, a lot of Boomers are hoping to see changes as well, but we're a slowly decreasing voting pool, so…how about picking up the slack, eh?
I don't know that it worked, but Gen Y could stand a little of that caution now, when faced with "promises" from their authority figures.
Instead of emulating the lifestyles, greed and consumption that is the hallmark of the Boom generation, and in large part the X Gen as well, charting a completely new economic path, with new standards of success really is what's needed.
Add to that stepping up to correct damaging economic and social policies, and you have a formula for a whole new kind of success.
The ability to think about alternatives and muster the confidence to reach for those new goals is what those expensive schools really gave Gen Y
OK I'm calling BS on that attitude. You don't know anything about what a lot of boomers had to do to get by when they were young. I unloaded boxcars of concrete for $1/hr when I was 14 to help out my family. I threw bales for summer after summer. I worked on concrete crews going to university. So did all of my friends. As sympathetic as I am to young people, I REALLY get choked with the idea that we had it easy. WE didn't, our PARENTS didn't, and they and their parents grew up in the Great Depression. So quit whining and get your acts together. You're nothing special, but when you resort to whining about boomers having it easy and you having it so hard…well, I've got an 80 pound jack hammer you're welcome to use. Any time.